Annual Report 2003

2003
Annual Report
Mitsubishi Rayon
Profile
Mitsubishi Rayon Co., Ltd. was established in 1933 as a manufacturer of
rayon staple. Since then, the Company has grown beyond the role of synthetic fiber maker to become a leading manufacturer of polymers based on
the acrylic business — the MMA (methyl methacrylate) and AN (acrylonitrile)
business complexes. Through constant anticipation of future needs, we have
expanded our business into the fields of synthetic resins, carbon fibers and
composite materials, plastic optical fibers, and high-performance membranes.
In fiscal 2002, the first year of our three-year new medium-term management plan, Mitsubishi Rayon Group implemented investment for growth as
planned and achieved substantial results in cost reduction exceeding the target for the term.
We will steadily carry out the policies stipulated under the plan to further
strengthen our core sectors while growing new core operations such as the
Aqua-Sustainability Business. In this way, we plan to turn the Mitsubishi
Rayon Group into a high-return, high-growth, unique specialty enterprise.
Contents
1
Financial Highlights
17 Seven-Year Summary
2
A Message from the President
18 Financial Review
7
Board of Directors, Corporate Auditors and Executive Officers
20 Consolidated Balance Sheets
8
Strategies in Action
22 Consolidated Statements of Operations
10 MRC Group at a Glance
23 Consolidated Statements of Shareholders’ Equity
12 Business Performance Breakdown by Segment
24 Consolidated Statements of Cash Flows
12
Chemicals and Plastics
25 Notes to Consolidated Financial Statements
13
Fibers
33 Report of Independent Auditors
14
Specialty Products, Engineering and Others
34 Subsidiaries and Affiliates
15 Research & Development
36 Organization
16 Environmental Activity & Safety Report
37 Corporate Data
Cover photograph: LaSpa Osaka — Mitsubishi Rayon’s fiber-optic lighting is in use at this natural spa and health center.
Creating Opportunities for Growth by Leveraging Unique Specialties
The MMA (methyl methacrylate) and AN (acrylonitrile) business complexes are the Mitsubishi Rayon Group’s two main sources
of earnings. Boasting high levels of technological know-how and production capacity even by world standards, these two
business complexes serve as powerful engines of growth in the many business fields in which the Group is engaged.
To lay the foundations for further development, we have not only mapped out a growth strategy that leverages our strengths
in these material categories, but are also promoting a product R&D and marketing approach closely attuned to user needs. By
adopting a well-balanced mix of the product-out approach used by the business complexes and the market-in approach used
by our specialty products and engineering businesses, we are confident of reorganizing our overall operations in the direction
of high return and high growth.
Overview of Business Segments
AN Business Complex
MMA Business Complex
Based around methyl methacrylate (MMA) as the basic raw
material as well as finished products made from MMA, this
business complex is the Company’s largest, encompassing
polymethyl methacrylate (PMMA), acrylic films, coating
resins, artificial marble, plastic modifiers, plastic optical fiber
(POF), and other products. The MMA Business Complex is
far and away the largest in Asia in terms of scale, and is the
largest in the world in terms of range of items produced.
The management is aiming to leverage its structural strength
to grow it into the world’s largest comprehensive business
complex.
Based around acrylonitrile (AN) as the basic raw material as
well as finished products made from AN, this business complex produces acrylic fibers, carbon fibers, and hydrogen
cyanide derivatives. It aims to become the largest polymer
operation in Asia. Acrylic fibers are produced in Japan,
where the Company boasts facilities that are No.1 in scale
in Asia, while spinning is carried out in countries where
wage levels are lower, such as Indonesia, the Philippines,
and China. Carbon fibers are produced at plants in Japan
and the United States using precursor materials produced
by Asia’s largest acrylic fiber plant. Hydrogen cyanide, a byproduct of acrylonitrile production, is used as the raw material for various derivatives: these include flocculants, in
which the Company is No.1 in Asia. The Complex is also
developing a pharmaceutical intermediates business utilizing biotechnology and optical activity technology.
Business Complexes and Segments
Segments
Acrylic Business
Non-Acrylic Business
AN
Business MMA Business Complex
Complex
Chemicals and Plastics
Sales
●
●
●
●
●
●
●
●
●
●
●
Fibers
Chemicals (MMA monomer, higher esters)
Acrylic resins (PMMA sheets, pellets)
Acrylic resin processed products (acrylic films,
aircraft materials, bathtubs)
Coating resins
Plastic modifiers
Artificial marble*
Specialty Products, Engineering and Others Sales
●
●
●
●
Plastic optical fibers
Plastic rodlenses
Prism sheets
Construction materials (aquarium, domes,
mirrors and sky lights)
¥101 billion
Hydrogencyanide derivatives
(pharmaceutical intermediates)
AN monomer*, Acrylamide*, Flocculants*
●
Acrylic fibers
●
Carbon fibers and composite materials (tows,
cloth, prepreg, reinforced resin pellets)
¥ 59 billion
Methylamine, DMF
Polyester resins
ABS resins*
●
Textiles (acetate fibers,
polyester fibers)
Acetate tow
Polypropylene fibers
Carpets
●
Water purifiers
Water treatment equipment and systems
Plant engineering
Printed circuit boards
¥140 billion
●
●
●
¥116 billion
¥94 billion
Products marked with an asterisk are manufactured by equity-method affiliates.
●
●
●
¥90 billion
¥300 billion
Future Growth Areas
Construction Materials Business
The Aqua-Sustainability Business
Mitsubishi Rayon is advancing into the field of environmental protection, centered on its cutting-edge proprietary
water treatment technology. We aim to grow the world’s
leading membrane-based water treatment business. The
Aqua-Sustainability Business breaks down into the areas of
household-use water purification and industrial waste water
treatment equipment employing hollow fiber membranes,
and waste water treatment utilizing flocculants.
Information Materials Business
By leveraging our core competencies of optical control
technology and molecular design technology, we aim to
take advantage of our integrated polymethyl methacrylate
production system to become a major player in the world
market for optical fiber communications materials and
devices. The Information Materials Business is involved in
three business lines – the optical information transmission
business, centered on plastic optical fibers; the optical sensor business, which revolves around rodlenses; and the
electronic substrate business, whose main product is
printed circuit boards.
The Company’s goal is to establish itself as a significant
presence in this market utilizing transparent resins as its
main material. This business handles numerous product categories, including molding materials, sheets and films,
earthquake reinforcing materials, materials for water tanks,
mirror materials, materials for interior and exterior decoration, exterior wall materials, plastic materials for domes, and
the construction of sports facilities.
Life Science Business
Mitsubishi Rayon is developing a new business that combines mainly biotechnology, hollow fiber membrane technology, and resin processing technology. Products include
pharmaceutical intermediates, genome devices (DNA chips),
and medical devices such as water purification and carbonation equipment.
Energy Business
This business segment consists of the sale of materials for
fuel cells and for CNG tanks. The Company is adopting the
market-in approach with a view to growing this segment as
a priority area in the near future.
Market-in approach
Aqua-sustainability
Product-out approach
Global and unique special development
Financial Highlights
Mitsubishi Rayon Company, Limited and its Consolidated Subsidiaries
Years ended March 31, 2003 and 2002
Thousands of
U.S. dollars
Millions of yen
2003
2002
2003
¥300,641
¥306,455
$2,501,173
12,089
529
100,574
6,002
(964)
49,933
Total assets
332,757
348,102
2,768,361
Shareholders’ equity
134,168
136,153
1,116,206
Net sales
Income before income taxes and minority interests
Net income (loss)
Net income (loss) per share — Basic (yen and dollars)
¥
9.61
¥
(1.53)
$
0.08
Shareholders’ equity per share (yen and dollars)
218.44
217.34
1.817
Net cash provided by operating activities
31,077
31,685
258,544
Net cash used in investing activities
(21,940)
(16,991)
(182,529)
Net cash used in financing activities
(12,517)
(14,534)
(104,135)
7,400
10,948
61,564
Cash and cash equivalents at end of year
Notes:
1. The translation of yen amounts into U.S. dollars is included solely for convenience, as a matter of arithmetical computation only, at the rate of
¥120.20=$1.
2. The computation of net income (loss) per share is based on the weighted average number of shares of common stock outstanding during each year.
Net sales
Net income (loss)
Total assets
(¥ billion)
(¥ billion)
(¥ billion)
Net income (loss)
per share
(¥)
349 347
310 313
326
9.6
411 402
306 300
8.2
7.2
378
7.6
358 359 348
15.4
332
13.0
11.4
6.0
12.1
9.6
-0.1 -0.9
97
98
99
00
01
02
03
97
98
99
00
01
02
-0.2 -1.5
03
97
98
99
00
01
02
03
97
98
99
00
01
02
03
1
A Message from the President
Yoshiyuki Sumeragi
President
We’re on our way to becoming a high-profit
corporate group with high-growth potential,
possessing a unique combination of specialty
chemicals.
Our employees are firmly resolved to transform the Mitsubishi
Rayon Group into a high-return, high-growth enterprise — the
primary goal marked out in our “Program: US ➝ 2004” three-year
medium-term management plan, which was inaugurated in fiscal
2002. We will do everything in our power to further the growth of
the Company by focusing our management resources on becoming the world’s number one company in the acrylic business — the
MMA (methyl methacrylate) and AN (acrylonitrile) business complexes.
2
Q
Please tell us about the Company’s performance since the inaugural year of the
current medium-term management plan.
A
We have made some solid investments in our future growth and achieved cost reductions beyond
our expectations.
I. Building the world’s strongest acrylic product chain
The medium-term management plan places importance on three target areas: 1) global expansion
of the acrylic business, 2) reform of the Company’s earnings structure and cost structure, and
3) cultivating new businesses.
In the first area, targeting the acrylic business, we plan to focus on the high growth potential of the
East Asian market by constructing and putting into operation a number of plants in Japan and overseas, starting in fiscal 2003.
(1) Acrylic powder (15,000-ton annual production capacity)
Acrylic powder is an environmentally-friendly material used for automotive undercoating and
body sealers. Substantial growth is expected in the market for this powder. The Otake
Production Center in Hiroshima, where this powder is to be produced, was put into operation
in June 2003.
(2) Acrylic pellets for molded products (40,000-ton annual production capacity)
A factory for the production of acrylic pellets to be used in automotive and IT sector manufacturing, located in Nandong, Jiangsu Province, China, is to go into operation in November 2003.
(3) Acrylic sheets (20,000-ton annual production capacity)
Construction has begun on a factory adjacent to the above-mentioned premises in Nandong,
Jiangsu Province, China, to manufacture acrylic resin sheets. The plant is scheduled to go into
operation in May 2005, and it will employ a competitive high-quality, high-performance continuous production method developed by Mitsubishi Rayon.
(4) MMA monomers (100,000-ton annual production capacity)
The Company is planning the construction of an MMA monomer plant in China, which it hopes
will go into operation in 2005. This will provide a unified structure for our acrylic business,
from upstream monomers to downstream polymers.
3
(5) Acrylic fibers (50,000-ton annual production capacity)
Construction is to begin on a factory in Ningbo, Zhejiang province for the production of acrylic
fibers, targeted to go into operation in July 2005. The factory is to be built in China to take
advantage of the rapidly growing market in that country, which already has the world’s greatest
demand for acrylic fibers.
At the same time, the carbon fiber business is losing profitability due to an excess supply worldwide. The Company is targeting a major recovery of earnings from this business through substantial cost cuts from improvements in production technology, development of industrial uses
for the carbon fibers, and improvements in the Company’s marketing structure for this business.
II. Targeting ¥11 billion in cost reductions over three-year period under the current
medium-term management plan
The Company is rigorously promoting the structural reform of its expenses. In fiscal 2002, the
Company made a thorough examination of the entire process from raw material procurement to
production and distribution and succeeded in cutting costs by approximately ¥3.5 billion. During
the two-year period from fiscal 2003 to 2004, we will be resolute in our pursuit of measures to
streamline the Company by another ¥7.5 billion.
III. Cultivating new businesses for the next generation
Mitsubishi Rayon is seeking ways to become involved in new lines of business. Selecting from
among those areas in which we excel, we are working toward boosting our chances of success and
establishing ourselves in these businesses as soon as possible.
We are a pioneer in water purification and wastewater treatment utilizing hollow fiber membranes.
As the use of membranes in water treatment has become the mainstream both in Japan and overseas, this has developed into a promising business. We established a company in China for the
manufacture and sale of hollow fiber membrane elements, which have become vital for the creation of new urban infrastructures throughout China, and this company began production in July
last year.
The Mitsubishi Rayon Group boasts the world’s top share in plastic optical fibers. Business negotiations with major European car manufacturers are becoming more prevalent for use in automotive
data transmission.
In other businesses currently in the developmental stage, we have established the production technology necessary for fibrous DNA chips, and we have made progress on joint research with domestic and overseas fuel cell and vehicle manufacturers concerning fuel cell gas diffusion layers,
culminating in the installation of mass production line. We are developing next-generation technologies and products that make optimal use of our core technologies and strengths.
4
Q
What is your interpretation of the Company’s consolidated results in fiscal 2002?
A
We were able to enhance our profitability.
The term ended March 31, 2003 was a full one, marked by a number of bold measures designed to
achieve corporate growth.
The Company saw a steady growth in exports throughout the year, mainly to East Asia, despite a
number of external factors including the steep rise in the cost of raw materials and the falling price
of carbon fibers. Despite an approximate ¥19,500 million drop in revenues due to business restructuring centered on the transfer of our ABS resin business, the Mitsubishi Rayon Group posted only a
slight 1.9% decrease in net sales on a consolidated basis, to ¥300,641 million (US$2,501.2 million).
On the profit side, operating income rose 2.8% to ¥19,754 million (US$164.3 million) and net income
rose ¥6,966 million over the previous year, to ¥6,002 million (US$49.9 million).
We were able to achieve an improvement in earnings through further promotion of aggressive
management and cost structure reforms following three years of bolstering our foundations by specializing in our core businesses and disposing of unprofitable businesses.
Q
What measures does the Company intend to put into action in fiscal 2003?
A
We will continue to follow our medium-term management plan and raise the level of our performance.
We have no intention of changing our management philosophy. Our aim is to become number one
in the world in our core acrylic business, while maintaining a focus on improving profitability.
We will develop numerous unique, higher-value-added products, and through constant reforms of
production technology build a corporate position of strength that will not be swayed by fluctuations in the cost of raw materials. The key factors that promote this are originality and technology.
We have demonstrated our superiority in terms of the quality of our acrylic sheets and acrylic pellets as well as our cost competitiveness and production technology. Our growth scenario began
with our building a base in China for the production of polymers, which was followed by our constructing a base for the production of the monomers that are their raw materials.
We aim to achieve a reform of our revenue and cost structure ahead of schedule and further
strengthen our cost competitiveness, while at the same time accelerating the commercialization and
systematic transfer of new businesses still in their developmental stages to their own departments.
5
Q
How do you plan to strengthen corporate governance?
A
By promoting transparent and compliant management.
Mitsubishi Rayon Group is well aware of its social responsibility to promote transparent and compliant business activities in accordance with the law and higher corporate ethics.
During the term under review, the Company set up a Management Advisory Committee, consisting
mainly of members outside the Company, to work together with the Board of Directors and Board
of Auditors. Set up to place more importance on the perspectives of compliance and the
Company’s shareholders, the Management Advisory Committee has the power to advise the
Company on important business objectives and investments as well as propose solutions to issues
such as the selection of a successor to the Company president.
In 1997, we set up a Corporate Ethics Committee to improve the Group’s compliance with the law
and ensure that the public continues to place its trust in the Company. The Board of Auditors and
the Management Advisory Committee both conduct their own checks, and in November 2002, the
Company also set up a consultation desk for employees’ inquiries related to compliance.
The Safety, Environment, and Quality Assurance Committee, under the direct control of the
Company President, deals with the issues of safety, environment and quality assurance for the
Company as a whole. It sets independent target figures that exceed regulations as well as measures
to reduce substances that have a negative impact on the environment. They also compile the
Company’s Environmental and Safety Activities Report and release annual statistics on financial
results and environmental accounting.
Q
Finally, please say a few words to the Company’s shareholders.
A
We are doing our utmost to increase total shareholder return.
Mitsubishi Rayon aims to further strengthen the originality and competitive superiority of its acrylic
business and transform itself into a high-return, unique specialty enterprise. Our objectives are
clear, and all that is left is for us to expedite the necessary measures and bring about the expected
results.
From June of the previous term to June of the term under review, the Company purchased 14.3
million shares of its own stock. In the same way, we are planning to purchase a maximum of 15
million shares of Company stock in fiscal 2003.
We aim to enhance total shareholder return by improving our market presence and building a
structure that will give rise to a higher level of earnings.
As we make steady inroads into the global market, we look forward to the increased understanding
and support of our shareholders.
6
Board of Directors, Corporate Auditors and Executive Officers
Eiichi Taguchi
Yoshiyuki Sumeragi
Chairman
President
Koji Mimura
Isao Yamamoto
Masanao Kanbara
Senior Managing Director
Senior Managing Director
Senior Managing Director
Katsuyoshi Fukuroya
Managing Director
Chairman
Senior Managing Directors
Corporate Auditors
Executive Officers
Eiichi Taguchi
Koji Mimura
Isao Yamamoto
Masanao Kanbara
Masaaki Aoki
Yoriyuki Tanaka
Hideki Hoshina
Isao Sasaki
Takumi Ubagai
Tomonobu Kokubu
Yuzo Aoyama
Hideki Kojima
Shinpei Haratake
Masanobu Watanabe
Kouichi Katayama
Toshiro Koshida
Ryoichi Yokoyama
President
Yoshiyuki Sumeragi
Managing Director
Katsuyoshi Fukuroya
Directors
Naoki Yamamoto
Takumi Ubagai
Noriyuki Tajiri
Senior Executive Officers
Koji Mimura
Masanao Kanbara
Katsuyoshi Fukuroya
Yasuro Noguchi
(As of June 27, 2003)
7
Strategies in Action
Mitsubishi Rayon moves to build Asia’s strongest MMA business with establishment of
acrylic sheet production & sales company in China’s Nandong City
In December 2002, Mitsubishi Rayon established a wholly owned subsidiary in
the city of Nandong in China’s Jiangsu Province, under the name of Mitsubishi
Rayon Polymer Nantong Co., Ltd. The Company will manufacture and sell
acrylic sheets utilizing a high-performance continuous production method
developed by us. Production is scheduled to start in May 2005, with an annual
capacity of 20,000 tons.
China is the largest market for acrylic sheet in Asia excluding Japan. With the
rapid expansion in the IT sector in recent years, demand for high-end acrylic
sheet is growing. Production of acrylic sheet in China is still mainly by the cellcast method, but the Mitsubishi Rayon Group plans to utilize its proprietary
technology — which boasts an overwhelming competitive advantage over rival
methods in terms of quality and productivity — to dominate the supply of
high-end acrylic sheet products.
The Mitsubishi Rayon Group’s MMA operations are already the largest in scale
in Asia. From here on, we aim to focus our efforts on strengthening our competitive advantage still further and building a solid business base that will reap
good earnings growth in the future.
LCD backlight-use light guide panel made from acrylic sheet
ACRYLITE is being increasingly used for mobile
phone displays, where
greater size and thinness
are at a premium.
Start on mass production of new-type prism sheets for high luminance LCD displays
LCD backlight Configuration
Example of system with a downward facing prism sheet
Light
Diffusion sheet
New type
Prism sheet
Light guide
panel
Lamp
Reflection sheet
Example of system with 2 upward facing prism sheets
Light
Diffusion sheet
Upward facing
prism sheets
(2 sheets form
a cross pattern)
Diffusion sheet
Lamp
Light guide
panel for dot
matrix printing
Reflection sheet
8
Mitsubishi Rayon Co., Ltd. has recently begun full-scale mass production of
a new type of prism sheet, which has a 30% higher luminance than conventional sheets used for high luminance LCD displays. Within three years, the
Company expects to see annual sales of ¥5 billion from this new product.
Smaller LCDs often use prism sheets as backlights, as these produce a uniform brightness. Until now, manufacturers have had to use two prism sheets
for edge-light LCD displays, but Mitsubishi Rayon has developed a new type
that gives 30% more brightness. These prism sheets have been greeted with
considerable enthusiasm by LCD makers, and in response, the Company has
begun full-scale mass production.
Mitsubishi Rayon has optimized the prism sheet for high luminance LCD
displays on a nanoscale through the use of technology involving the precise
molding of acrylic resins, to produce a prism sheet with enhanced lightconcentrating efficiency. Since this new product necessitates the use of only
one prism sheet, it has also served to enhance the luminance of LCDs and
make them both thinner and lighter. They are ideal for use with notebook
PCs and mobile phones.
Acrylic fiber joint venture set up in China
Representatives of the joint venture partners sign
the contract and the articles of incorporation of the
new company at a ceremony in January 2003
In March of this year, Mitsubishi Rayon set up an acrylic fiber manufacturing
and sales company — Ningbo Rayon Acrylic Fibers Co., Ltd. — in the city of
Ningbo in China’s Zhejiang Province. The new company, in which Mitsubishi
Rayon holds a 55% equity stake, is a joint venture with three Japanese trading
companies and a Chinese venture capital enterprise, and is the first such joint
venture in China in the acrylic fiber industry. Operation is scheduled to start in
July 2005 with an annual capacity of 50,000 tons.
Acrylic fibers are popular for their pleasant feel, easy colorability, and durability. They are extensively used in clothing such as sweaters, underwear, and
socks, as well as other textile products like stuffed toys, blankets, carpets and
other interior goods. Acrylic fiber consumption in China amounted to around
1,010,000 tons in 2002, and total demand should reach 1,100,000 tons or thereabouts by 2005.
The acrylic fiber VONNEL is used in a wide
variety of products, including apparel, interior
furnishings, and stuffed toys
We hope to leverage our many years’ experience in the manufacture of virtually the whole range of acrylic fibers, combined with our precise, cutting-edge
technology and strong cost-competitiveness, to win a substantial share of the
ever-growing Chinese market.
Mitsubishi Rayon develops continuous production line for Gas
Gas Diffusion Layer
(GDL) for fuel cells
Diffusion Layer for fuel cells
The Company has successfully developed a continuous mass production line technology for Gas Diffusion Layers (GDLs) for use in
Proton Exchange Membrane Fuel Cells (PEMFC), which are seen as
the next-generation vehicle power source. GDLs are key components of the electrodes in PEMFC: they require not only gas permeability as well as electrical conductivity, but also easier handling in
mass production and cost reduction.
The GDLs developed by Mitsubishi Rayon are of the rolled carbon
paper format, and cost-effective mass production has been made
possible through the use of a continuous production line processes.
A mass production line has already been built at the Company’s
Toyohashi Production Center, and shipment of samples began in
March this year.
Diagram showing basic structure of a PEMFC
Gas Diffusion Layer
Hydrogen
H+
H2
H
H
Oxygen
O2
+
+
+
H
H
+
H
+
Water
H2O
Catalyst
Catalyst
Electrolytic membrane
9
MRC Group at a Glance
Chemicals and Plastics
Acrylic sheets
SHINKOLITE
Operating results
Sales results (¥ billion)
01
135
123
02
03
116
Operating income (¥ billion)
01
02
Overseas sales
14.3
13.6
03
15.4
12.3
%
38.7
%
Share of consolidated sales
Performance review
Major products
●
Although business restructuring centered on the transfer
of the Company’s ABS resin business caused a decrease
in revenues in the amount of approximately ¥19,500
million, the growth of sales, brought about by vigorous
demand in the MMA (methyl methacrylate) business,
one of the Group’s core businesses, partially offset the
decline, against which the Company was able to
increase operating income.
●
There was substantial growth in sales of acrylic sheets
due to the rapid rise in the need for light-guiding plates
accompanying the sudden popularity of LCD screens.
There was also a growth in sales of acrylic resin pellets
due to vigorous demand from makers of cars, IT equipment, and sundry processed goods.
■ Chemicals
(MMA monomer,
higher esters)
■ Acrylic Resins
(PMMA sheets, pellets)
10
■ Coating Resins
■ Plastic Modifiers
Fibers
Specialty Products,
Engineering and Others
Acrylic filament yarns
SILPALON
Aquarium domes of
SHINKOLITE
Sales results (¥ billion)
Sales results (¥ billion)
01
101
01
88
86
02
96
02
03
94
03
Operating income (¥ billion)
01
Operating income (¥ billion)
Overseas sales
01
2.5
02
2.7
03
2.9
90
14.8
%
02
31.4
03
2.6
1.4
%
●
The sales volume of acrylic staple was steady due to the
increased demand for staple fibers on the East Asian
market. However, it took time for the Company to raise
the sales prices of its products to compensate for the
sudden rise in the cost of raw materials. Under the
consolidated subsidiary Mitsubishi Rayon Textiles Co.,
Ltd., there was a further decline in production of
polyester filaments, due to sluggish demand in Japan,
but triacetate filaments recovered on the U.S. market
and expanded on the Middle Eastern market.
■ Acrylic Fibers
■ Textiles
(acetate fibers,
polyester fibers)
■ Acetate Tow
■ Polypropylene Filaments
■ Carpets
Overseas sales
3.5
7.6
%
30.0
%
●
Demand for carbon fibers and composite materials
remained steady. The Company, however, suffered from
intensified price competition, and will greatly improve
profitability by improving marketing activities and costcutting measures.
●
The market for rod lenses expanded thanks to their fullscale use in multifunction printers.
●
Mitsubishi Rayon Engineering Co., Ltd. increased its
sales primarily from the construction of large-scale manufacturing facilities.
■ Carbon Fibers and
Composite Materials
■ Plastic Optical Fibers
■ Plastic Rodlenses
■ Prism Sheets
■ Water Purifiers
■ Water Treatment
Equipment and Systems
■ Plant Engineering
■ Construction Materials
11
Business Performance Breakdown by Segment
Sales of the Chemicals and Plastics segment for the term
ended March 31, 2003 came to ¥116,214 (US$966.8 million), a year-on-year decrease of ¥7,057 million (US$58.7
million), or 5.7%.
Chemicals and Plastics
Acrylic resin is called the queen of
plastic. Acrylic sheets (SHINKOLITE),
because of their superior transparency and anti-weatherability, are
widely used in signs, displays, and
large aquarium tanks as well as in the
IT industry.
Against the backdrop of a clear recovery of demand for MMA monomer, the
Company increased its sales volume and made efforts to compensate for the rise in
the cost of raw materials with increased sales prices.
The sales volume increased as a result of vigorous demand in the Japanese and East
Asian markets for acrylic resin pellets for use in the car and IT industries, as well as
sundry goods.
Sales of acrylic sheets soared thanks to demand for their use as light-guiding plates
for LCD backlighting as well as their use in hardening the surfaces of mobile phone
screens.
Sales of acrylic coating materials grew thanks to increased demand for their use with
cars and PET bottles. New uses and markets were also discovered for environmentallyfriendly acrylic powder.
Demand for plastic modifiers remained low in Japan but grew in the East Asian market.
The Company’s ABS resin business was transferred to our equity method affiliate
UMG ABS Co., Ltd., a three-way joint venture established with Ube Industries Ltd.
and General Electric Company in April 2002.
DIANAL coating material, featuring
outstanding anti-weatherability, is
used in automotive overcoatings and
repair coatings to highlight the beauty
of automobile exterior finishes.
MMA Business Complex ➤ Aiming to be world’s No.1 business complex using
comprehensive capabilities
Goals under the
“Program: US→2004”
12
● To accelerate global development with main focus on the Asian market
To build production center in China as third manufacturing base following Japan and Thailand
● To achieve synergy through coordination of monomer and polymer business strategies
● To establish superior cost-competitiveness
●
Sales of the Fibers segment for the term under review
declined by ¥2,633 million (US$21.9 million), or 2.7%, to
¥94,364 million (US$785.1 million).
Fibers
VONNEL is a comfortable,
warm acrylic fiber ideal for
sweaters and blankets.
In acrylic staple fibers, the Company’s sales on the Japanese market declined, owing
to sluggish demand brought about by competition with imported products. In overseas markets, the Company’s share of the blanket market increased and the Company
had steady exports to China and other areas of the East Asian market. A rise in the
cost of raw materials had a significant impact on earnings because a simultaneous rise
in sales prices did not materialize.
Market demand remained sluggish in the field women’s apparel, supplied by our consolidated subsidiary Mitsubishi Rayon Textiles Co., Ltd. The Company made further
reductions in the production of polyester filaments. On the other hand, the demand for
triacetate filaments recovered on the U.S. market and grew on the Middle Eastern
market.
The sales volume of polypropylene filaments grew due to their effective use in products such as vehicle floor mats.
Despite continued declines in the sales prices due to the slowing of the construction
industry, sales of carpet manufacturer Mitsubishi Burlington Co., Ltd., another subsidiary, grew thanks to an increase in large-scale orders for office buildings.
The triacetate filament yarn
SOALON displays a large variety of
features when combined with
different fibers such as polyester.
Goals under the
“Program: US→2004”
Acrylic fibers ➤ To establish a production center in China aiming for unmatched
level of presence in the Asian market
Textiles ➤ To develop a global niche business through the merger of acetate and
polyester fiber operations
13
Sales of the Specialty Products, Engineering and Others segment came to ¥90,062 million (US$749.3 million), representing a year-on-year increase of ¥3,877 million (US$32.3
million), or 4.5%.
specialty Products, Engineering and Others
As price competition for carbon fibers and composite materials intensified, the
Company continued to promote their use in sporting goods and developed other
industrial applications.
We strengthened the manufacture and sale of plastic optical fibers for automotive
data transmission through a tie-up with a maker of electric wires for cars in Europe.
Plastic rodlenses also grew on the market as their use in multifunction printers
became more commonplace. The Company also made a full-scale launch of its prism
sheets for LCDs.
Plastic rodlenses are reading
devices for facsimile machines
and scanners.
In home-use water purifiers, there was a growth in domestic sales of faucet-mounted
models that remove lead and trihalomethane. In the field of hollow-fiber membrane
products, we established a company for the manufacture and sale of sewage treatment membrane products in China to meet the demand centered on the East Asian
market.
Sales from consolidated subsidiary Mitsubishi Rayon Engineering Co., Ltd. also
increased, thanks to new installations of large-scale manufacturing facilities.
Ryoko Co., Ltd., another subsidiary, continued to experience difficulties in its mainline business of construction materials, but sales of materials for IT and household
electrical goods grew.
Goals under the
“Program: US→2004”
14
Carbon fibers ➤ To maximize cost competitiveness and accelerate development of
industrial applications through full utilization of strengths in the AN business complex
Aqua-sustainability ➤ To accelerate the global expansion of the water purification and
waste water treatment businesses
Information materials ➤ To develop applications for plastic optical fibers in optical data
transmission, such as automobile applications
Construction materials ➤ To develop a “one-stop shop” business through our consolidated
subsidiary Ryoko Co., Ltd.
Life science ➤ To establish a de facto standard in DNA chip business with clinical testing devices
Research & Development
In line with our corporate mission of constantly seeking out new areas of “unique specialty,” We pursue
improvement and innovation in production technology so as to further reinforce our core competence for the
MMA & AN business complexes. In addition, we emphasis on development of specialty materials and highperformance products met market needs, and we also invest considerable effort in the creation of new technologies that promise to open up completely new markets.
We have applied new assessment system through which research and development themes would be selected
properly. This system leads to speedy and effective achievement. Moreover, our R&D organizations are going
on restructuring to be flexible and maneuverable. All these measures are serving to impart new momentum to
the Company’s R&D activities.
R&D expenses for fiscal 2002 were ¥10,777 million: the principal achievements are summarized below.
Chemicals and Plastics
●
●
●
●
●
Developed longer lasting new catalyst for production of MMA monomer (use at Otake plant to
start in 2003)
Developed a revolutionary new continuous casting method, which effects a dramatic improvement in production efficiency of PMMA sheets,
thus meeting increased supply needs
Developed new polyester material for food
containers that meets consumer needs for heatsterilization, transparency and gas-barrier
properties, and can fully withstand heating in
microwave ovens
●
●
●
●
●
Stepped up efforts in research into ways of
improving productivity and quality in carbon
fibers and composite materials
Developed and marketed extra-bright type of
prism sheets for use in LCD backlights
Developed and marketed faucet-mounted water
purifier based on universal design concept
Jointly pursued research into fibrous DNA chips;
began work on practical commercialization
Developed a polyester resin for toners which has
good adhesion and offset performance at low
temperature for energy saving
Developed and marketed UV-curable hardcoatings (which consist of hybridized material of
organic and inorganic) for vehicles and optical
disks
Fibers
●
Speciality Products, Engineering and Others
Developed the new fiber with heat-generation by
moisture-absorbing property, created by combining acrylic polymer and cellulose acetate using
proprietary blending technology.
Developed environmentally friendly non-halogen
polypropylene filaments (which exhibit high
weatherability and flame resistance) for protection net as building material, as well as in window blinds
Fibrous DNA chips
R&D expenses (consolidated)
(¥ billion)
FY00
01
02
4.5
4.0
3.6
1.3
1.2
1.0
4.2
0.6 10.7
4.9
0.5 10.7
5.5
Chemicals and Plastics
Fibers
Speciality Products, Engineering and Others
0.4 10.7
Miscellaneous
15
Environmental Activity & Safety Report
In line with their overall management philosophy, Mitsubishi Rayon and the
Mitsubishi Rayon Group pursue the following basic policies with regard to
safety, the environment, and quality.
•Top priority is placed on safety and the environment in all business activities, as these are essential for corporate existence.
Investment in safety and environmental protection equipment
(¥ billion)
1.4
FY95
96
2.0
97
•We supply our customers with satisfactory, safe and reliable products.
We have included an environmental action plan (see the diagram below)
under our three-year medium-term business plan, which commenced in
fiscal 2002, with the aim of raising our environmental management to higher
levels.
General Policy Positions
Environmental Action Plan (FY2002-2004)
Practicing publicly trusted environmental management
2.6
98
1.9
99
2.0
00
1.5
01
1.6
02
1.9
Mitsubishi Rayon intends to press on
with measures to reduce or eliminate the
emission of dioxin, reduce the volume of
industrial waste, conserve energy, and
curb emissions of harmful air pollutants.
To this end, investment will be made in
all necessary equipment.
Energy consumption levels
Assembling a
comprehensive
management system
based on the principles of
Responsible Care
Implementing
environmentally sound
business practices
Further enhancement of
transparency and
objectivity
(%)
FY90
100.0
97
95.1
98
For details, see “Safety & Environment” in Mitsubishi Rayon’s website.
(http://www.mrc.co.jp/english/corporate/osea_e/index.html)
Highlights of Fiscal 2002
1. In addition to existing long-term plans for energy conservation, the reduction of the amount of industrial waste landfill, and the elimination of
chemical substances emission volume, Mitsubishi Rayon also implemented
a single-year plan on these issues for fiscal 2002.
2. Environmental accounting was conducted and the results publicly released.
3. Mitsubishi Rayon took part in international efforts in the field of chemical
substance safety assessment, including the ICCA global initiative on High
Production Volume chemicals and U.S. Challenge Program.
4. Risk assessment activities, which are essential to the operation of an effective OHSMS (Occupational Health and Safety Management System) and
widely recognized as a superior means of raising the level of safety and
health in the workplace, were carried out on a Company-wide basis.
5. Mitsubishi Rayon has established the MRC Mental Health Care Plan as part
of its efforts to ensure a safe and comfortable workplace for its employees. Copies of the plan were distributed to all employees.
6. Mitsubishi Rayon will continue to work toward improving the level of
environmental and safety management among the whole Group, and all
necessary support will be provided to subsidiaries and affiliates.
16
98.9
99
93.7
00
95.1
01
93.9
02
90.2
10
89.6
(target)
Mitsubishi Rayon is pursuing a policy of
reducing energy consumption per unit of
production by at least 1% per year. The
Company has set itself a target of a reduction to 90% or less of fiscal 1990 levels by
fiscal 2010.
Landfill waste volume
(1,000t)
FY91
10.9
4.9
01
02
05
(target)
4.2
3.8
*excluding coal ash
Mitsubishi Rayon is on track to achieve
its goals of reducing landfill waste to
35% of the fiscal 1991 volume by fiscal
2005 and to 25% by fiscal 2010. The
reduction plan has been executed on
schedule.
Seven-Year Summary
Years ended March 31, 2003, 2002, 2001, 2000, 1999, 1998 and 1997
Millions of yen (except per share)
2003
Net sales
2002
¥300,641 ¥306,455
Cost of sales
2001
2000
1999
1998
1997
¥326,254
¥313,888
¥310,556
¥347,282
¥349,116
228,873
230,410
246,732
235,869
229,855
253,970
259,992
Selling, general and
administrative expenses
52,014
56,837
58,915
59,028
61,105
64,627
66,302
Operating income
19,754
19,207
20,607
18,990
19,595
28,683
22,821
Income (loss) before income taxes
and minority interests
12,089
529
(2,824)
10,502
13,205
16,584
15,654
6,002
(964)
(141)
7,687
7,268
9,677
8,207
Total assets
332,757
348,102
359,041
358,551
378,990
402,074
411,955
Shareholders’ equity
134,168
136,153
138,942
148,947
147,315
138,348
132,145
53,229
53,229
53,229
53,229
53,229
51,926
51,926
Net income (loss)
Common stock
Amounts per share (yen):
Net income (loss) — Basic
Diluted
Cash dividends
Shareholders’ equity
Depreciation
¥
9.61 ¥
(1.53) ¥
(0.22) ¥
12.10
¥
11.41
¥
15.42
¥
13.08
9.60
—
—
12.07
11.29
15.01
12.76
6.00
6.00
6.00
6.00
6.00
6.00
5.00
218.44
217.34
221.77
237.74
229.11
220.50
210.61
¥ 15,288 ¥ 16,537
¥ 16,898
¥ 17,982
¥ 17,822
¥ 17,612
¥ 18,733
Capital expenditures
21,156
16,722
14,866
15,009
17,725
21,863
15,199
Total debt
81,566
91,060
97,665
114,276
134,149
140,621
155,415
R&D expenses
10,777
10,795
10,768
10,738
11,158
11,516
11,550
8,872
9,211
9,656
10,043
9,193
9,246
8,799
Number of employees
Yen
Common stock price range:
High
424
471
410
370
417
502
497
Low
229
262
250
207
272
252
365
17
Financial Review
(on a consolidated basis)
and investments in the amount of ¥4,066
million (US$33.8 million) was recorded. Costs
incurred in restructuring, principally of the
fibers business, amounted to ¥1,057 million
(US$8.8 million). As a result of these factors,
we registered net other expenses of ¥7,664
million (US$63.8 million). Net income came to
¥6,002 million (US$49.9 million).
Operating Results
The East Asian economies generally followed
a recovery path during the term under review,
the fiscal year ended March 31, 2003, but the
recovery of the United States economy was
slower than expected. In Japan, domestic
demand remained slack, although an increase
was seen in exports, and no signs of an
upcoming recovery were visible.
In these circumstances, consolidated net
sales of the Company recorded a year-on-year
decline of 1.9% to ¥300,641 million
(US$2,501.2 million). The gross profit was
down by 5.6% at ¥71,768 million (US$597.1
million). The main causes of this were the
transfer of the ABS resin business to a joint
venture, and a steep rise in raw materials
prices. Selling, general and administrative
expenses were down by 8.5% at ¥52,014
million (US$432.7 million), while operating
income rose 2.8% to ¥19,754 million (US$164.3
million).
In the category of other income and
expenses, income from equity in earnings of
affiliates came to ¥1,903 million (US$15.8
million), while a loss on valuation of securities
Operating income
Operating income to
total assets ratio
(¥ billion)
Financial Position
Total assets as of the end of the term under
review were down by 4.4% from the previous
term-end, at ¥332,757 million (US$2,768.4
million). Meanwhile, total liabilities declined
6.8% to ¥192,281 million (US$1,599.7 million),
principally as a result of a decrease in interestbearing liabilities.
Current assets fell 10.3% to ¥129,040
million (US$1,073.5 million), while property,
plant and equipment grew 1.5% to ¥132,374
million (US$1,101.3 million).
Current liabilities edged up over the
previous year to ¥131,945 million (US$1,097.7
million). The equity ratio rose from 39.1% to
40.3%.
Total debt
Total shareholders’
equity
(¥ billion)
(%)
(¥ billion)
147 148
7.1
28.6
132
155.4
140.6
22.8
19.5 18.9
20.6
19.2 19.7
18
98
99
00
01
02
03
97 98
134.1
114.2
97.6
5.5
5.5
97
5.9
5.7
5.1
5.2
99
00
01
138 136 134
138
02
03
97
98
99
00
01
91.0
02
81.5
03
97
98
99
00
01
02
03
previous term, to ¥104,224 million (US$867.1
million), accounting for 34.7% of total
consolidated sales. Sales in Asian markets,
principally China, Thailand, and Indonesia,
rose ¥7,630 million year-on-year, to ¥67,296
million (US$559.9 million). Sales in the rest of
the world, mainly the United States and
Europe, were down ¥2,259 million at ¥36,928
million (US$307.2 million).
Cash Flows
Net cash provided by operating activities
declined by ¥608 million to ¥31,077 million
(US$258.5 million), owing to a smaller
decrease in trade receivables than in the
previous term, despite an increase in income
before income taxes and minority interests.
Net cash used in investing activities
increased by ¥4,949 million over the previous
term, to ¥21,940 million (US$182.5 million).
Net cash used in financing activities
amounted to ¥12,517 million (US$104.1
million), a decrease of ¥2,016 million from the
previous term, due to a decline in repayments
of loans, which more than offset the outflow
involved in the acquisition of treasury stock
and the redemption of debentures.
As a result of the foregoing, cash and cash
equivalents as the end of year stood at ¥7,400
million (US$61.6 million), a decrease of ¥3,547
million from the previous term-end.
R&D Expenses
Mitsubishi Rayon conducts research and
development, principally in its core technology
areas of organic synthesis, polymer synthesis,
polymer forming, and biotechnology fields,
with the goals of designing innovative
production methods and creating new products
with the potential to become the driving force
of new business enterprises. R&D expenses for
the term under review came to ¥10,777 million
(US$89.7 million), an decrease of ¥17 million
over the previous business term.
Overseas Sales by Geographic Location
The Company’s sales on a consolidated basis
in markets other than Japan during the term
under review rose ¥5,370 million over the
Depreciation
Capital expenditures
R&D expenses
(¥ billion)
(¥ billion)
(¥ billion)
Sales breakdown by
area
(%)
21.8
18.7
17.6 17.8 17.9
21.1
17.7
16.8 16.5
15.2
15.1
11.5 11.5
Asia 22.4
11.1 10.7 10.7 10.7 10.7
16.7
15.0 14.8
Others 12.3
Japan 65.3
Asia: Mainly China, Thailand and Indonesia
Others: Mainly North America and Europe
97
98
99
00
01
02
03
97
98
99
00
01
02
03
97
98
99
00
01
02
03
19
Consolidated Balance Sheets
Mitsubishi Rayon Company, Limited and Consolidated Subsidiaries
March 31, 2003 and 2002
Thousands of
U.S. dollars
(Note 3)
Millions of yen
Assets
2003
2002
2003
¥ 7,552
¥ 11,100
Notes receivable
12,575
12,228
104,617
Accounts receivable
56,579
61,912
470,707
Less allowance for doubtful accounts
(1,066)
(1,020)
68,088
73,120
566,456
39,363
43,438
327,479
2,070
1,568
17,221
11,964
14,694
99,534
129,040
143,923
1,073,544
24,298
24,079
202,146
Buildings
105,210
105,376
875,291
Machinery and equipment
335,444
336,642
2,790,715
9,505
9,713
79,077
474,457
475,812
3,947,230
(342,083)
(345,367)
(2,845,948)
132,374
130,444
1,101,281
16,514
12,922
137,388
Investment securities (Note 6)
26,261
32,554
218,478
Deferred tax assets (Note 9)
16,884
16,398
140,466
Other assets
11,683
11,858
97,196
71,343
73,734
593,536
¥332,757
¥348,102
$2,768,361
Current Assets:
Cash and time deposits
$
62,829
Notes and accounts receivable:
Inventories (Note 5)
Deferred tax assets (Note 9)
Other current assets
Total current assets
(8,869)
Property, Plant and Equipment (Notes 8 and 11):
Land
Construction-in-progress
Less accumulated depreciation
Property, plant and equipment, net
Investments and Other Assets:
Investments in and advances to unconsolidated
subsidiaries and affiliates
Total investments and other assets
Total assets
20
Thousands of
U.S. dollars
(Note 3)
Millions of yen
Liabilities and Shareholders’ Equity
2003
2002
2003
¥ 44,289
10,000
¥ 48,315
1,669
$ 368,461
83,195
10,465
38,509
10,197
40,184
87,063
320,374
Accrued expenses
Accrued income taxes (Note 9)
Deferred tax liabilities (Note 9)
Other current liabilities
48,975
4,639
4,294
24
19,722
50,381
4,536
709
40
26,232
407,446
38,594
35,724
200
164,077
Total current liabilities
131,945
131,886
1,097,712
27,277
30,364
89
2,605
41,075
30,678
66
2,635
226,930
252,612
740
21,672
60,336
74,455
501,963
6,307
5,606
52,471
53,229
34,522
50,609
30
(902)
(3,319)
53,229
38,088
48,363
30
(69)
(3,470)
442,837
287,205
421,040
250
(7,504)
(27,612)
(2)
(18)
(17)
Current Liabilities:
Short-term bank loans (Note 7)
Current portion of long-term debt
Notes and accounts payable:
Notes payable
Accounts payable
Long-Term Liabilities:
Long-term debt (Note 7)
Retirement allowances
Deferred tax liabilities (Note 9)
Other long-term liabilities
Total long-term liabilities
Minority Interests in Consolidated Subsidiaries
Shareholders’ Equity:
Common stock, without par value:
Authorized – 1,160,701,000 shares in 2003;
1,173,014,000 shares in 2002;
Issued –
614,197,820 shares in 2003;
626,510,820 shares in 2002;
Capital surplus
Retained earnings
Revaluation difference
Unrealized losses on other securities
Foreign currency translation adjustments
Less treasury stock, at cost
(2003 — 7,787 shares; 2002 — 61,022 shares)
Total shareholders’ equity
134,168
136,153
1,116,206
¥332,757
¥348,102
$2,768,361
Contingent Liabilities (Note 14)
Total liabilities and shareholders’ equity
See accompanying notes to consolidated financial statements.
21
Consolidated Statements of Operations
Mitsubishi Rayon Company, Limited and Consolidated Subsidiaries
Years ended March 31, 2003 and 2002
Thousands of
U.S. dollars
(Note 3)
Millions of yen
Net Sales
Cost of Sales
Gross profit
Selling, General and Administrative Expenses (Note 10)
Operating income
Other Income (Expenses):
Interest and dividend income
Interest expense
Equity in earnings of affiliates
Restructuring charges
Gain on sale of investment securities
Loss on valuation of securities and investments
Provision for doubtful accounts
Other, net
Income before income taxes and minority interests
Income Taxes (Note 9):
Current
Deferred
Income before minority interests
Minority Interests
Net income (loss)
2003
2002
2003
¥300,641
228,873
71,768
52,014
19,754
¥306,455
230,410
76,044
56,837
19,207
$2,501,173
1,904,101
597,072
432,729
164,343
607
(1,546)
1,903
(1,057)
57
(4,066)
(424)
(3,137)
(7,664)
12,089
454
(2,360)
(336)
(1,168)
521
(2,726)
(869)
(12,190)
(18,678)
529
5,050
(12,862)
15,832
(8,794)
474
(33,827)
(3,527)
(26,098)
(63,760)
100,574
5,700
(558)
6,947
(944)
¥6,002
2,911
(2,505)
124
(1,088)
¥(964)
47,421
(4,642)
57,795
(7,854)
$49,933
Yen
2003
Amounts per Share:
Net income (loss):
Basic
Diluted
Cash dividends
See accompanying notes to consolidated financial statements.
22
¥9.61
9.60
6.00
U.S. dollars
(Note 3)
2002
¥(1.53)
—
6.00
2003
$0.08
0.08
0.05
Consolidated Statements of Shareholders’ Equity
Mitsubishi Rayon Company, Limited and Consolidated Subsidiaries
Millions of yen
Number of
shares of
common
stock
Balance at March31, 2001
Adjustments for merger of
consolidated subsidiaries
Bonuses to directors
Staff and workers bonus and
welfare fund
Cash dividends paid
Net loss for the year ended
March 31, 2002
Unrealized holding loss on
securities
Foreign currency translation
adjustments
Net change in treasury stock
Balance at March 31, 2002
Revaluation increment in
property of affiliates
Effect of application of equity
method toward the previously
consolidated affiliate
Bonuses to directors
Staff and workers bonus and
welfare fund
Cash dividends paid
Liquidation of treasury stock
Net income for the year
ended March 31, 2003
Unrealized holding loss on
securities
Foreign currency translation
adjustments
Net change in treasury stock
Balance at March 31, 2003
Common
stock
Capital
surplus
Retained
earnings
Revaluation
difference
Unrealized
loss on
other
securities
Foreign
currency
translation
adjustments
Treasury
stock
626,510,820
¥53,229
¥38,088
¥53,087
¥30
¥(45)
¥(5,447)
¥(0)
—
—
—
—
—
—
1
(1)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(1)
(3,759)
—
—
—
—
—
—
—
—
—
—
—
(964)
—
—
—
—
—
—
—
—
—
(24)
—
—
—
—
626,510,820
—
—
53,229
—
—
38,088
—
—
48,363
—
—
30
—
—
(69)
1,977
—
(3,470)
—
(18)
(18)
—
—
—
107
—
—
—
—
—
—
—
—
—
—
(112)
(1)
—
—
—
—
—
—
—
—
—
—
(12,313,000)
—
—
—
—
—
(3,565)
(1)
(3,749)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
6,002
—
—
—
—
—
—
—
—
—
(833)
—
—
—
—
614,197,820
—
—
¥53,229
—
—
¥34,522
—
—
¥50,609
—
—
¥30
—
—
¥(902)
151
—
¥(3,319)
—
16
¥(2)
Common
stock
Balance at March 31, 2002
Revaluation increment in
property of affiliates
Effect of application of equity
method toward the previously
consolidated affiliate
Bonuses to directors
Staff and workers bonus and
welfare fund
Cash dividends paid
Liquidation of treasury stock
Net income for the year
ended March 31, 2003
Unrealized holding gain on
securities
Foreign currency translation
adjustments
Net change in treasury stock
Balance at March 31, 2003
Capital
surplus
Thousands of U.S. dollars (Note 3)
Unrealized
loss on
Retained
Revaluation
other
earnings
difference
securities
$442,837 $316,872 $402,354
$250
Foreign
currency
translation
adjustments
$ (574) $(28,869)
Treasury
stock
$(150)
—
—
890
—
—
—
—
—
—
—
—
(932)
(8)
—
—
—
—
—
—
—
—
—
—
—
—
—
(29,659)
(8)
(31,190)
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
49,933
—
—
—
—
—
—
—
—
(6,930)
—
—
—
—
—
—
—
—
$442,837 $287,205 $421,040
—
—
$250
—
1,256
—
—
$(7,504) $(27,612)
—
133
$ (17)
See accompanying notes to consolidated financial statements.
23
Consolidated Statements of Cash Flows
Mitsubishi Rayon Company, Limited and Consolidated Subsidiaries
Years ended March 31, 2003 and 2002
Thousands of
U.S. dollars
(Note 3)
Millions of yen
2003
Operating Activities:
Income before income taxes and minority interests
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
Goodwill amortization
Gain on business transfers
(Decrease) increase in retirement allowances
Increase in allowance for doubtful accounts
Equity in (earnings) losses of affiliates
Interest expense
Loss on disposal of property, plant and equipment
Gain on sale of investment securities
Loss on valuation of securities and investments
(Gain) loss on sale of affiliate equities
Decrease in trade receivables
Decrease in inventories
Decrease in trade payables
Bonuses to directors
Other, net
Net cash provided by operating activities
Investing Activities:
Proceeds from business transfers
Proceeds from sale of property, plant and equipment
Purchases of property, plant and equipment
Purchases of investment securities
Proceeds from sale of investment securities
Decrease (increase) in short-term loans receivable
Long-term loans advanced
Other, net
Net cash used in investing activities
Financing Activities:
Proceeds from long-term loans
Decrease in short-term bank loans
Repayment of long-term loans
Redemption of debentures
Acquisition of treasury stock
Cash dividends paid
Proceeds from issue of shares to minority shareholders
Payments of finance lease obligations
Other, net
Net cash used in financing activities
Effect of exchange rate changes on cash and cash equivalents
Net increase in cash and cash equivalents
Beginning balance of cash and cash equivalents
24
¥12,089
2002
¥
529
2003
$100,574
15,407
179
—
(447)
219
(1,903)
1,546
626
(56)
4,066
(195)
2,885
1,920
(1,725)
(2)
(3,530)
16,903
130
(2,152)
9,936
847
336
2,360
1,263
(501)
2,726
1,948
18,241
1,459
(10,182)
(2)
(12,157)
128,178
1,489
—
(3,719)
1,822
(15,832)
12,862
5,208
(466)
33,827
(1,622)
24,002
15,973
(14,351)
(17)
(29,368)
31,077
31,685
258,544
—
664
(20,816)
(1,410)
824
58
(6)
(1,254)
1,000
1,236
(18,122)
(1,422)
1,083
(1,007)
(50)
290
—
5,524
(173,178)
(11,730)
6,855
483
(50)
(10,433)
(21,940)
(16,991)
(182,529)
2,329
(473)
(3,423)
(1,669)
(3,547)
(4,530)
307
(1,508)
(1)
1,342
(6,207)
(5,413)
—
—
(4,490)
253
—
(19)
19,376
(3,935)
(28,478)
(13,885)
(29,509)
(37,687)
2,554
(12,546)
(8)
(12,517)
(14,534)
(104,135)
(167)
(3,547)
10,948
148
309
10,639
(1,389)
(29,509)
91,082
Cash and cash equivalents at end of year
¥ 7,400
¥10,948
$ 61,564
Supplemental Disclosures of Cash Flow Information:
Cash paid during the year for:
Interest
Income taxes
¥ 1,545
153
¥ 2,309
10,202
$ 12,854
1,273
See accompanying notes to consolidated financial statements.
Notes to Consolidated Financial Statements
Mitsubishi Rayon Company, Limited and Consolidated Subsidiaries
1. Basis of Consolidated Financial Statements
The books and records of Mitsubishi Rayon
Company, Limited (the “Company”) and its domestic
consolidated subsidiaries are maintained in the
manner and form required or permitted under the
Commercial Code of Japan and Japanese accounting
practices, including special accounting dispositions
stipulated in the Corporation Tax Law of Japan. The
books and records of the overseas consolidated
subsidiaries are maintained in conformity with the
accounting principles and relevant legal requirements
of their countries of domicile.
The accompanying consolidated financial
statements have been prepared from the accounts
maintained by Mitsubishi Rayon Company, Limited in
accordance with the provisions set forth in the
Japanese Securities and Exchange Law and in
conformity with accounting principles and practices
generally accepted and applied in Japan, which may
differ in certain material respects from accounting
principles and practices generally accepted in
countries and jurisdictions other than Japan.
As permitted under the Japanese Securities and
Exchange Law, amounts of less than one million yen
have been omitted. As a result, the totals shown in
the accompanying financial statements (both in yen
and in U.S. dollars) do not necessarily agree with the
sums of the individual amounts.
Certain amounts previously reported have been
reclassified to conform to the current year’s
presentation.
2. Summary of Significant Accounting Policies
(a) Consolidation
The accompanying consolidated financial statements
include the accounts of the Company and all
subsidiaries over which substantial control is exerted
through either majority ownership of voting stock
and/or by other means. All significant intercompany
balances and transactions have been eliminated in
consolidation.
Certain foreign subsidiaries are consolidated on the
basis of fiscal periods ending December 31, which
differ from that of the Company; however, the
necessary adjustments have been made if the effect of
the difference is material.
Investments in affiliates (companies over which the
Company has the ability to exercise significant
influence) are stated at cost plus equity in their
undistributed earnings or losses. Consolidated net
income includes the Company’s equity in the current
net income or loss of such companies, after the
elimination of unrealized intercompany profits.
All assets and liabilities of the subsidiaries are
revalued on acquisition, if applicable, and the excess
of cost over the equity in their underlying net assets
at the date of acquisition is amortized over a period
of five years on a straight-line basis if such excess is
material, or charged to income when incurred if
immaterial.
(b) Cash equivalents
For purposes of the statements of cash flows, the
Company considers all highly liquid debt instruments
with a maturity of three months or less when
purchased to be cash equivalents.
(c) Inventories
Inventories are mainly stated at cost determined by
the average cost method.
(d) Property, plant and equipment
Tangible fixed assets:
1) Buildings (excluding building improvements)
Primarily by the straight-line method
2) Other tangible fixed assets
Primarily by the declining-balance method
The estimated useful lives for financial reporting
purposes are as follows:
Building and structures
8 - 50 years
Machinery, equipment and vehicles 4 - 15 years
Intangible fixed assets: By the straight-line method
Costs for the development of software used
internally by the Company are amortized by the
straight-line method over the estimated useful life of
the software (five years).
(e) Securities
Securities are classified into three categories: trading,
held-to-maturity or other securities.
Trading securities are carried at fair value. Held-tomaturity securities are stated at amortized cost. Other
securities with quoted market prices are carried at
market value and the difference between the
acquisition cost and the carrying value, unrealized gain
or loss, is recognized as a component of shareholders’
equity under “Unrealized gain (loss) on marketable
securities.” The cost of other securities sold is
computed based on the moving average method.
Other securities without quoted market prices are
stated at cost by the moving average method.
25
(f) Derivative financial instruments
Stated at fair value.
(g) Foreign currency translation
The revenue and expense accounts of the foreign
consolidated subsidiaries are translated at the rates of
exchange in effect at the balance sheet date of each
subsidiary except for the components of
shareholders’ equity, the balance sheet accounts are
also translated into yen at the rates of exchange in
effect at the balance sheet date. The components of
shareholders’ equity are translated at their historical
exchange rates. Translation adjustments are presented
as a component of shareholders’ equity and minority
interests in the accompanying consolidated financial
statements.
(h) Research and development expenses
Research and development expenses are charged to
operations as incurred.
(i) Retirement allowances
The Company’s employees are covered by an
unfunded retirement allowance plan and a funded
defined benefit pension plan.
The amount of the severance and retirement
benefits is based on the basic rate of pay at
termination, years of service and certain other factors.
The Company and its domestic consolidated
subsidiaries accrue employees’ severance and
retirement benefits based on the actuarially
determined retirement benefit obligation and the fair
value of the plan assets with the adjustments of the
following items; unrecognized net retirement benefit
obligation at transition, unrecognized net actuarial
gain or loss and unrecognized prior service cost.
Actuarial gain or loss is amortized by the straightline method over 5 years. Prior service cost is
primarily expensed as incurred during each year.
In addition, directors and statutory auditors are
customarily entitled to lump-sum payments under an
unfunded retirement allowance plan. Provision for
retirement allowances for these officers is made at an
estimated amount.
(j) Leases
Noncancelable leases are accounted for as operating
leases except that leases which stipulate the transfer
of ownership of the leased assets to the lessee are
accounted for as finance leases.
26
(k) Hedge accounting
1) Method of hedge accounting
Principally, the deferred hedge accounting method is
applied.
Forward foreign exchange contracts and interest
rate swaps which meet certain criteria are excluded
from the application of hedge accounting.
2) Financial instruments qualifying as hedges and the
related transactions, assets and liabilities are as
follows:
Financial instruments
Forward foreign exchange
contracts
Interest rate swaps
Transactions, assets and liabilities
Future foreign exchange
transactions
Borrowings
3) Hedge policy
The risk exposure to movements in exchange rates
and interest rates is hedged in accordance with the
Company’s risk management policy.
4) Hedge effectiveness evaluation
The Company evaluate the effectiveness of the hedges
by reference to cumulative cash flows for the elapsed
period estimated on financial instruments and related
transactions, assets and liabilities.
(l) Amounts per share
The computation of basic net income (loss) per share
is based on the weighted average number of shares
of common stock outstanding during each year.
Diluted net income per share is computed based on
the weighted average number of shares of common
stock outstanding each year after giving effect to the
dilutive potential of common stock to be issued upon
the conversion of convertible bonds.
Cash dividends per share represent the cash
dividends declared as applicable to the respective years.
Effective from the year ended March 31, 2003, the
Company adopted new accounting standards for
Earnings per share.
Amounts per share information calculated applying
the prior accounting standards for the year ended
March 31, 2003 is as follows:
Net income
¥ 9.65
Diluted
¥ 9.64
Shareholders’ equity
¥218.44
(m) Land revaluation
Pursuant to the “Law Concerning the Revaluation of
Land,” land used for the business operations of an
affiliate was revalued on December 31, 2000. The
revaluation of the land was based on the official
standard assessments in accordance with the relevant
regulations of the Corporate Income Tax Law of
Japan with certain necessary adjustments.
3. U.S. Dollar Amounts
The translation of yen amounts into U.S. dollar amounts is
included solely for convenience, as a matter of arithmetic
computation only, at ¥120.20=U.S.$1.00, the approximate
exchange rate in effect on March 31, 2003. The translation
should not be construed as a representation that yen have
been, could have been, or could in the future be, converted
into U.S. dollars at the above or any other rate.
4. Supplemental Cash Flow Information
The following table represents a reconciliation of cash
and cash equivalents as of March 31, 2003 and 2002:
March 31,
Millions of yen
2003
2002
Cash and time deposits
Less time deposits, with
maturities of more than
three months
¥7,552
Cash and cash equivalents
¥7,400
(152)
Thousands of
U.S. dollars
2003
¥11,100
$62,829
(152)
(1,265)
¥10,948
$61,564
5. Inventories
Inventories at March 31, 2003 and 2002 is as follows:
Millions of yen
2003
2002
Thousands of
U.S. dollars
2003
March 31, 2003
Thousands of U.S. dollars
Acquisition Carrying Unrealized
costs
value
gain (loss)
Securities whose carrying value
exceeds their acquisition costs:
Stocks
$ 43,170 $ 66,057 $ 22,879
Debt securities
—
—
—
Other
—
—
—
Subtotal
43,170
66,057
22,879
Securities whose acquisition costs
exceed their carrying value:
Stocks
138,319
Debt securities
—
Other
33
102,662
—
8
(35,657)
—
(17)
Subtotal
102,679
(35,682)
138,361
Total
$181,531 $168,735 $(12,795)
March 31, 2002
Millions of yen
Acquisition Carrying Unrealized
costs
value
gain (loss)
Securities whose carrying value
exceeds their acquisition costs:
Stocks
¥ 7,692
Debt securities
—
Other
—
Subtotal
¥11,566
—
—
¥ 3,873
—
—
7,692
11,566
3,873
13,163
—
2
(4,139)
—
(1)
17,306
13,165
(4,140)
¥24,999
¥24,732
¥ (267)
Finished goods
and work in process
Raw materials and supplies
¥30,431
8,932
¥34,111
9,327
$253,170
74,309
Securities whose acquisition costs
exceed their carrying value:
Stocks
17,302
Debt securities
—
Other
4
Total
¥39,363
¥43,438
$327,479
Subtotal
March 31,
6. Securities
a) Information regarding other securities with quoted
market prices as of March 31, 2003 and 2002 is as follows:
March 31, 2003
Securities whose carrying
value exceeds their
acquisition costs:
Stocks
Debt securities
Other
Subtotal
Millions of yen
Acquisition Carrying Unrealized
costs
value
gain (loss)
¥ 5,189
—
—
¥ 7,940
—
—
¥ 2,750
—
—
5,189
7,940
2,750
Securities whose acquisition
costs exceed their
carrying value:
Stocks
Debt securities
Other
16,626
—
4
12,340
—
1
(4,286)
—
(2)
Subtotal
16,631
12,342
(4,289)
¥21,820
¥20,282
¥(1,538)
Total
Total
b) Information regarding held-to-maturity securities and
other securities without quoted market prices at March
31, 2003 is as follows:
Millions of yen
Held-to-maturity securities
Other securities without
quoted market prices
¥
—
¥4,770
Thousands of
U.S. dollars
$
—
$39,684
c) Sales of securities classified as other securities
amounted to ¥93 million ($774 thousand) with aggregate
gain and loss of ¥57 million ($474 thousand) and ¥(0)
million ($0 thousand), respectively, for the year ended
March 31, 2003.
d) The redemption schedule for held-to-maturity
securities and other securities with maturity dates at
March 31, 2003 is summarized as follows:
27
Thousands of
U.S. dollars
Millions of yen
Within 1 year
1 to 5 years
¥0
0
$0
0
7. Short-Term Bank Loans and Long-Term Debt
Short-term bank loans represent notes generally
maturing within 365 days at an interest rate of 1.44% per
annum as of March 31, 2003.
Long-term debt at March 31, 2003 and 2002 was as
follows:
Thousands of
U.S. dollars
2003
Millions of yen
2003
2002
March 31,
1.8% unsecured convertible
bonds in yen due 2003
¥
—
2.4% unsecured bonds in yen
due 2005
10,000
2.025% unsecured bonds in
yen due 2003
10,000
1.95% unsecured bonds in
yen due 2004
10,000
Unsecured loans from banks
and insurance companies
13,066
43,066
(15,788)
Less current portion
¥ 27,277
¥ 1,669
$
—
10,000
83,195
10,000
83,195
10,000
83,195
14,330
108,702
45,999
(4,923)
358,286
(131,348)
¥41,075
$ 226,930
The convertible bonds, unless previously redeemed,
were convertible into shares of common stock of the
Company at the option of the holders at the following
conversion price:
1.8% bonds
Conversion period
Conversion price
per share
Up to March 28, 2003
¥597.10
The aggregate annual maturities of long-term debt
subsequent to March 31, 2003 are summarized as
follows:
For the year ending March 31,
2004
2005
2006
2007
2008 and thereafter
Millions of yen
Thousands of
U.S. dollars
¥15,788
12,095
14,569
320
292
$131,348
100,624
121,206
2,662
2,429
¥43,066
$358,286
8. Depreciation
Depreciation charged to income for the years ended
March 31, 2003 and 2002 was as follows:
Years ended March 31,
¥15,288
¥16,537
Thousands of
U.S. dollars
2003
$127,188
9. Income Taxes
Income taxes applicable to the Company and its
domestic consolidated subsidiaries comprise corporation
tax and local taxes, which, in the aggregate, resulted in a
statutory tax rate.
Reflecting a change in the local tax rates, the statutory
tax rates used to calculate deferred tax assets and
liabilities are 42.0% for temporary differences expected
to be realized within one year and 40.6% for temporary
differences expected to be realized one year or later for
the year ended March 31, 2003. The statutory tax rate
was 42.0% for the year ended March 31, 2002.
As a result of change in the statutory tax rates,
deferred tax assets for the year ended March 31, 2003
decreased by ¥491 million after the deduction of
deferred tax liabilities, and income taxes deferred
increased by ¥470 million.
Significant components of the deferred tax assets and
liabilities held by the Company and its consolidated
subsidiaries as of March 31, 2003 were as follows:
March 31, 2003
Millions of yen
Deferred tax assets:
Accrued bonuses
¥ 1,324
Accrued enterprise tax
336
Employees’ retirement benefits
13,546
Tax loss carry forwards
317
Loss on valuation of securities
and investments
1,362
Unrealized gain on intercompany
sales of fixed assets
1,129
Unrealized losses on other securities
648
Other
1,265
Total deferred tax assets
Deferred tax liabilities:
Tax reserve
Other
Total deferred tax liabilities
Net deferred tax assets
28
Millions of yen
2003
2002
Thousands of
U.S. dollars
$ 11,015
2,795
112,696
2,637
11,331
9,393
5,391
10,524
19,929
165,799
657
430
5,466
3,577
1,088
9,052
¥18,841
$156,747
10. Research and Development Expenses
Research and development expenses for the years ended
March 31, 2003 and 2002 were as follows:
Years ended March 31,
Millions of yen
2003
2002
¥10,777
¥10,795
Thousands of
U.S. dollars
2003
$89,659
11. Pledged Assets
The assets pledged as collateral for long-term loans of
¥249 million ($2,072 thousand) and short-term loans of
¥1,934 million ($16,090 thousand) at March 31, 2003
were as follows:
March 31, 2003
Property, plant and equipment,
at net book value
Millions of yen
Thousands of
U.S. dollars
¥4,003
¥4,003
$33,303
$33,303
12. Retirement Benefit Plans
The Company and its domestic consolidated subsidiaries
have defined benefit plans, i.e., welfare pension fund
plans, tax-qualified pension plans and lump-sum
payment plans, covering substantially all employees who
are entitled to lump-sum or annuity payments, the
amounts of which are determined by reference to their
basic salary, length of service, and the conditions under
which termination occurs.
The following table sets forth the funded and accrued
status of the plans, and the amounts recognized in the
consolidated balance sheet at March 31, 2003 for the
Company’s and the consolidated subsidiaries’ defined
benefit plans:
As of March 31, 2003
Millions of yen
Retirement benefit obligation
¥(74,591)
Plan assets at fair value
20,150
Employees’ retirement benefit trust
4,966
Unfunded retirement benefit
obligation
(49,473)
Unrecognized net retirement
benefit obligation at transition
—
Unrecognized actuarial gain or loss 19,942
Unrecognized prior service cost
—
Net retirement benefit obligation
Prepaid pension cost
Accrued retirement benefits
Thousands of
U.S. dollars
$(620,557)
167,637
41,314
(411,589)
—
165,907
—
(29,530)
—
(245,674)
—
¥(29,530)
$(245,674)
The components of retirement benefit expenses for
the year ended March 31, 2003 are outlined as follows:
For the year ended March 31, 2003
Millions of yen
Thousands of
U.S. dollars
Service cost
Interest cost
Expected return on plan assets
Amortization of actuarial
gain or loss
Prior service cost
¥2,103
2,062
(616)
$17,496
17,155
(5,125)
2,858
(1,963)
23,777
(16,331)
Total
¥4,445
$36,980
The assumptions used in accounting for the above
plans were as follows:
As of March 31, 2003
Domestic companies
Discount rate
Expected return on plan assets
primarily 2.5%
primarily 2.5%
13. Derivatives
The Company utilizes derivatives for the purpose of
hedging its exposure to adverse fluctuations in foreign
currency exchange rates and interest rates, but does not
enter into such transactions for speculative or trading
purposes.
The Company is exposed to credit risk in the event of
nonperformance by the counterparties to the derivative
transactions, but any such loss would not be material
because the Company enters into such transactions only
with financial institutions with high credit ratings. The
notional amounts of the derivatives do not necessarily
represent the amounts exchanged by the parties and,
therefore, are not a direct measure of the Company’s risk
exposure in connection with derivatives.
The disclosure of fair value information for derivatives
at March 31, 2003 has been omitted since all derivatives
have been accounted for as hedges.
14. Contingent Liabilities
The Company had the following contingent liabilities at
March 31, 2003:
March 31, 2003
Millions of yen
As guarantor of bank loans of
unconsolidated subsidiaries and
affiliates
As guarantor of bank loans of others
Thousands of
U.S. dollars
¥ 636
775
$ 5,291
6,448
¥1,412
$11,747
29
15. Leases
The following pro forma amounts represent the
acquisition costs, accumulated depreciation and net book
value of leased property as of March 31, 2003 and 2002,
which would have been reflected as property, plant and
equipment in the balance sheets if finance lease
accounting had been applied to the finance leases
currently accounted for as operating leases:
March 31,
Millions of yen
2003
2002
Thousands of
U.S. dollars
2003
Acquisition costs
Accumulated depreciation
¥2,725
1,747
¥2,729
1,753
$22,671
14,534
Net book value
¥ 978
¥ 975
$ 8,136
The pro forma depreciation portion of the lease
payments relating to finance lease transactions
accounted for as operating leases for the years ended
March 31, 2003 and 2002 amounted to ¥509 million
($4,235 thousand) and ¥495 million, respectively, which
were computed by the straight-line method over the
terms of the respective leased assets.
Future minimum lease payments (including the
interest portion) subsequent to March 31, 2003 for
finance lease transactions accounted for as operating
leases are summarized as follows:
Year ending March 31,
Millions of yen
Thousands of
U.S. dollars
2004
2005 and thereafter
¥411
567
$3,419
4,717
Total
¥978
$8,136
16. Authorized Shares
The number of authorized shares was 1,160,701,000 and
1,173,014,000 for the years ended March 31, 2003 and
2002, respectively. 12,313,000 shares are liquidated
during the year ended March 31, 2003.
At a shareholder’s meeting held on June 27, 2003, an
amendment of the articles of incorporation was
approved and the Company’s authorized shares are
changed to 1,200,000,000.
17. Litigation
In July 1999, a class action suit for damages was filed
against thirteen Japanese and U.S. companies including
the Company and its two U.S. subsidiaries by the carbon
fiber users in the U.S. market who alleged that the
companies had engaged in activities to maintain the
prices of carbon fiber by means of contracts on prices,
allocation of customers, etc. in violation of U.S. antitrust
30
laws. Management of the Mitsubishi Rayon Group
believes that the Company and its U.S. subsidiaries have
never violated U.S. antitrust laws and will present a
justifiable rebuttal to these charges and win the civil
case.
18. Subsequent Events
1) Dividends declared
The following appropriations of retained earnings,
which have not been reflected in the accompanying
consolidated financial statements for the year ended
March 31, 2003, were approved at a shareholders’
meeting held on June 27, 2003:
Millions of yen
Year-end cash dividends of ¥3.00
($0.025) per share
¥1,842
Thousands of
U.S. dollars
$15,324
2) Issuance of unsecured straight bond
The Company has decided the following terms and
conditions for the issuance of domestic unsecured straight
bonds at the board meeting held on May 12, 2003:
Extent of issue:
¥10,000 million
Issue price:
¥100 per ¥100 in face value
Term of bond:
5 - 10 years
Interest rate:
below long-term prime rate
Subscription period: June 2 - September 1, 2003
19. Segment Information
The Company and its consolidated subsidiaries are
primarily engaged, mainly in Japan, in the manufacture
and sale of products in four major segments: the
chemicals and plastics segment, which includes
chemicals, acrylic resin, acrylic resin processed products,
coating resins and resin additives; the fibers segment,
which includes acrylic fibers, acetate fibers, polyester
fibers, polypropylene fibers and carpets; and the
specialty products, engineering and others segment,
which includes carbon fibers and composite materials,
plastic optical fibers, plastic rod lenses, printed circuit
boards, water purifiers, membranes, engineering and
machinery systems, water treatment equipment and
systems, and construction materials.
The business segment information for the Company and its consolidated subsidiaries for the years ended March 31,
2003 and 2002 is summarized as follows:
Year ended March 31, 2003
I. Sales and operating income
Sales to third parties
Intergroup sales and transfers
Total sales
Operating expenses
Operating income
II. Assets, depreciation and capital expenditures
Total assets
Depreciation
Capital expenditures
Year ended March 31, 2002
I. Sales and operating income
Sales to third parties
Intergroup sales and transfers
Total sales
Operating expenses
Operating income
II. Assets, depreciation and capital expenditures
Total assets
Depreciation
Capital expenditures
Millions of yen
Specialty
products,
engineering
and others
Total
Chemicals and
plastics
Fibers
¥116,214
8,381
¥94,364
194
¥ 90,062
30,447
¥300,641
39,023
124,595
109,189
94,558
91,575
120,510
119,083
339,665
319,848
¥ 15,406
¥ 2,983
¥
1,427
¥ 19,816
¥
¥119,543
6,682
12,387
¥91,950
4,728
4,496
¥ 99,123
3,877
4,272
¥310,618
15,288
21,156
¥ 22,139
—
—
Millions of yen
Specialty
products,
engineering
and others
Total
Chemicals and
plastics
Fibers
¥123,272
11,981
¥96,997
189
¥ 86,184
25,207
135,253
121,652
97,186
94,394
¥ 13,600
¥ 2,792
¥
¥120,241
7,696
7,958
¥98,213
5,263
4,230
Eliminations
or corporate
¥
—
(39,023)
¥300,641
—
(39,023)
(38,960)
300,641
280,887
(62)
¥ 19,754
Consolidated
¥306,455
37,377
¥
—
(37,377)
¥306,455
—
111,392
108,741
343,833
324,788
(37,377)
(37,541)
306,455
287,247
2,650
¥ 19,044
¥
163
¥ 19,207
¥ 99,335
3,576
4,533
¥317,790
16,537
16,722
¥ 30,311
—
—
¥348,102
16,537
16,722
Thousands of U.S. dollars
Specialty
products,
engineering
and others
Total
Fibers
$ 966,839
69,725
$785,058
1,614
$ 749,268
253,303
Total sales
Operating expenses
1,036,564
908,394
786,672
761,855
1,002,579
990,707
Operating income
$ 128,170
$ 24,817
$
11,872
$ 164,859
$
II. Assets, depreciation and capital expenditures
Total assets
$ 994,534
Depreciation
55,591
Capital expenditures
103,053
$764,975
39,334
37,404
$ 824,651
32,255
35,541
$2,584,176
127,188
176,007
$ 184,185
—
—
I. Sales and operating income
Sales to third parties
Intergroup sales and transfers
¥332,757
15,288
21,156
Eliminations
or corporate
Chemicals and
plastics
Year ended March 31, 2003
Consolidated
Eliminations
or corporate
Consolidated
$2,501,173
324,651
$
—
(324,651)
$2,501,173
—
2,825,832
2,660,965
(324,651)
(324,126)
2,501,173
2,336,830
(516)
$ 164,343
$2,768,361
127,188
176,007
31
The geographical segment information for the Company and its consolidated subsidiaries for the years ended March 31,
2003 and 2002 is summarized as follows:
Year ended March 31, 2003
Millions of yen
United States
of America
Total
Japan
Asia
I. Sales and operating income
Customers
Intersegment
¥271,701
6,843
¥14,078
6,457
¥14,861
821
Total sales
Operating expenses
278,545
260,798
20,536
18,386
15,683
15,778
¥ 17,747
¥ 2,149
¥
¥255,219
¥24,638
¥12,019
Operating income
II. Total assets
Year ended March 31, 2002
(94)
314,765
294,963
(14,123)
(14,075)
300,641
280,887
¥ 19,802
¥
(48)
¥291,878
¥40,879
¥ 19,754
¥332,757
¥
—
(14,437)
¥306,455
—
16,918
16,849
320,892
301,415
(14,437)
(14,168)
306,455
287,247
69
¥ 19,476
¥ (268)
¥ 19,207
¥12,063
¥299,746
¥48,355
¥348,102
¥14,341
6,050
¥16,599
319
Total sales
Operating expenses
283,580
266,577
20,392
17,988
¥ 17,003
¥ 2,403
¥
¥265,688
¥21,994
Asia
¥300,641
—
¥306,455
14,437
¥275,514
8,066
Japan
¥
—
(14,123)
Consolidated
I. Sales and operating income
Customers
Intersegment
Year ended March 31, 2003
¥300,641
14,123
Eliminations
or corporate
Asia
II. Total assets
Consolidated
Millions of yen
United States
of America
Total
Japan
Operating income
Eliminations
or corporate
Thousands of U.S. dollars
United States
of America
Total
Eliminations
or corporate
Consolidated
I. Sales and operating income
Customers
Intersegment
$2,260,408
56,930
$117,121
53,719
$123,636
6,830
$2,501,173
117,496
$
—
(117,496)
$2,501,173
—
Total sales
Operating expenses
2,317,346
2,169,700
170,849
152,962
130,474
131,265
2,618,677
2,453,935
(117,496)
(117,097)
1,501,173
2,336,830
$ 147,646
$ 17,879
$
$2,123,286
$204,975
$ 99,992
Operating income
II. Total assets
(782)
$ 164,742
$
(399)
$2,428,270
$340,092
$ 164,343
$2,768,361
Sales are analyzed geographically for the years ended March 31, 2003 and 2002 as follows:
Years ended March 31,
Sales designated for:
Japan
Asia
Other
Total
32
Millions of yen
2003
2002
Thousands of
U.S. dollars
2003
¥196,417
67,296
36,928
¥207,600
59,666
39,188
$1,634,085
559,867
307,221
¥300,641
¥306,455
$2,501,173
Report of Independent Auditors
The Board of Directors
Mitsubishi Rayon Company, Limited
We have audited the accompanying consolidated balance sheets of Mitsubishi Rayon Company,
Limited and consolidated subsidiaries as of March 31, 2003 and 2002, and the related consolidated
statements of operations, changes in shareholders’ equity and cash flows for the years then ended,
all expressed in yen. These financial statements are the responsibility of the Company’s
management. Our responsibility is to independently express an opinion on these financial
statements based on our audits.
We conducted our audits in accordance with auditing standards, procedures and practices generally
accepted and applied in Japan. Those standards, procedures and practices require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the
consolidated financial position of Mitsubishi Rayon Company, Limited and consolidated subsidiaries
at March 31, 2003 and 2002, and the consolidated results of their operations and their cash flows
for the years then ended in conformity with accounting principles and practices generally accepted
in Japan.
The U.S. dollar amounts in the accompanying consolidated financial statements with respect to the
year ended March 31, 2003 are presented solely for convenience. Our audit also included the
translation of yen amounts into U.S. dollar amounts and, in our opinion, such translation has been
made on the basis described in Note 3 to the consolidated financial statements.
June 27, 2003
See Note 1 to the consolidated financial statements which explains the basis of preparation of the consolidated financial statements of
Mitsubishi Rayon Company, Limited and consolidated subsidiaries under Japanese accounting principles and practices.
33
Subsidiaries and Affiliates
Subsidiaries (Consolidated)
Company
Issued share capital
(Millions)
Principal activities
Chemicals and Plastics
Thai MMA Co., Ltd.
Suzhou Sanyouli Chemicals Co., Ltd.
Jiangsu Xinling Chemical Co., Ltd.
MRC Unitech Co., Ltd.
MRC Polysaccharide Co., Ltd.
Diafloc Co., Ltd.
Diapolyacrylate Co., Ltd
Nantong Rayon Chemical Co., Ltd.
Shinko Gosei Co., Ltd.
Mitsubishi Rayon Polymer Nantong Co., Ltd.
Diatec Co., Ltd.
Diatec (Shanghai) Co., Ltd.
Acry Sunday Co., Ltd.
Dianal America, Inc.
Toei Kasei Co., Ltd.
THB1,300
USD2.4
USD2.005
JPY57
JPY50
JPY325
THB358
USD16
JPY40
USD8.0
JPY95
USD1.2
JPY30
USD15.0
JPY18
Production and sale of MMA monomer
Production and sale of BMA monomer
Production and sale of MA and DMF
Production and sale of perfumes, functional monomers
Processing and sale of polysaccharide
Production and sale of high molecule weight flocculants
and industrial cleaners
Production and sale of PMMA pellets
Production and sale of PMMA pellets
Production and sale of PMMA sheets
Production and sale of acrylic sheets
Production and sale of indication panels
Production and sale of acrylic indication panels
Sale of acrylic sheets and water purifiers
Production and sale of coating resins
Production and sale of coating and reagents
Fibers
MRC Tex Co., Ltd.
Tosen Co., Ltd.
P.T. Vonex Indonesia
Qingdao Lingtong Textile Co., Ltd.
Ningbo Rayon Acrylic Fibers Co., Ltd.
Ryoko Sizing Co., Ltd.
Mitsubishi Rayon Textile Co., Ltd.
Mitsubishi Burlington Co., Ltd.
Dia Mode Co., Ltd.
Dia Fashion Planning Co., Ltd.
JPY99
JPY60
USD23
USD5.0
0
JPY50
JPY400
JPY400
JPY30
JPY20
Production and sale of spun yarn
Dyeing, processing and sale of textile products
Production and sale of acrylic yarn
Production and sale of acrylic yarn
Production and sale of acrylic fibers
Sizing of acetate
Wholesale of fabric
Production and sale of carpets, interior decoration
Sale of fabric and clothes
Planning and developing of fabric materials
Specialty Products, Engineering and Others
Grafil, Inc.
Newport Adhesives and Composites, Inc.
MRC Composite Products Co., Ltd.
Dia Injection Molding Co., Ltd.
Ryoko Electronics Industries, Ltd.
Dalian Rayon Environmental Equipment Co., Ltd.
MRC Koda Co., Ltd.
MRC Home Products Co., Ltd.
Mitsubishi Rayon Engineering Co., Ltd.
MRE Maintenance Co., Ltd.
Ryoko Co., Ltd.
Nitto Gypsum Board Co., Ltd.
Mitsubishi Rayon America Inc.
MRC Asia (Thailand), Ltd.
MRC Hong Kong Co. Ltd.
MRC Holdings Ltd.
MRC Techno Research Inc.
34
USD1.3
USD2.1
JPY50
JPY30
JPY408
USD0.619
JPY150
JPY50
JPY1,200
JPY23
JPY100
JPY200
USD0.8
THB12
HKD1
THB6
JPY20
Production and sale of carbon fibers
Production and sale of adhesives and composites
Production and sale of carbon fiber composites
Processing and sale of GFRP products
Production and sale of printed circuit boards
Production and sale of hollow fiber membrane products
Processing of plastic products, membranes and medical products
Sale of water purifiers for home and industrial use
Engineering
Operation control and maintenance of machines
Sale of MMA-related products, construction of sports facilities
Production and sale of construction materials
Sale and information services
Sale and information services
Sale and information services
Holding company
Technological information services
Subsidiaries (Consolidated)
Company
Issued share capital
(Millions)
Principal activities
Specialty Products, Engineering and Others
MRC Finance Co., Ltd.
MRC Information Systems Co., Ltd.
M&U Co., Ltd.
Dia Kaihatsu Co., Ltd.
MRS Co., Ltd.
Horyo Co., Ltd.
Hokuriku Ryoko Sangyo Co., Ltd.
JPY30
JPY50
JPY20
JPY40
JPY10
JPY10
JPY10
Finance
Information systems
Management of real estate
Insurance Agency
Contract work in Otake Production Center
Contract work in Toyohashi Production Center
Contract work in Toyama Production Center
Affiliates (Accounted for by the Equity Method)
Company
Issued share capital
(Millions)
Principal activities
Chemicals and Plastics
Dia-Nitrix Co., Ltd.
Du Pont-MRC Co., Ltd.
Codec Chemical Co., Ltd.
San Esters Corporation
Sanyu Chemical Company Ltd.
Kashima Ekian Co., Ltd.
Diaglas Co., Ltd.
Asahi Plastics Co., Ltd.
Fuji Plastic Co., Ltd.
Fujiwara Co., Ltd.
Kokujyo Metal Processing Co., Ltd.
UMG ABS Co., Ltd.
MRC Resins (Thailand) Co., Ltd.
P.T. Diachem Resins Indonesia
JPY2000
JPY1000
JPY30
USD0.2
JPY30
JPY5
THB102
JPY24
JPY24
JPY80
JPY141
JPY3,000
THB50
IDR4,066
Production and sale of AN, AAM and polyacrylamide
Production and sale of artificial marbles
Sale of chemicals
Sale of chemical products
Sale of chemical products
Sale of ammonium
Production and sale of PMMA sheets
Processing and sale of plastic sheets
Sale of plastic sheets
Processing of inorganic glass and plastics
Processing and sale of plastic moldings
Production and sale of ABS resins
Production and sale of coating resins
Production and sale of coating resins
Fibers
Yarn Ventures & Resources, Inc.
Suntomik Co., Ltd.
Renown Jersey Co., Ltd.
Leilian Co., Ltd.
Tokai Knit Co., Ltd.
PHP335
JPY50
JPY400
JPY600
JPY50
Production and sale of acrylic yarn
Sale of women’s office uniform
Processing of knitwear
Sale of ready-made women‘s clothes
Production and sale of knitwear
JPY11
JPY100
JPY40
JPY20
JPY156
USD2.7
JPY150
Processing and sale of optical fibers
Production and sale of dry film photoresist
Sale of steel belts
Processing of MMA related products
Development and Production of pathological screening kits
Production and sale of polypropylene films
Production and sale of construction materials
Specialty Products, Engineering and Others
Markopt Co., Ltd.
Du Pont MRC Dry Film Ltd.
Nippon Belting Co., Ltd.
Meiho Co., Ltd.
Bio Medical Engineering Co., Ltd.
Mirwec Film Inc.
Sohma Gypsum Co., Ltd.
(As of March 31, 2003)
35
Organization
Corporate Planning Division
Audit Office
Business Planning & Development Division
Overseas Subsidiaries Administration Office
Logistics & Information Systems Planning Office
Public & Investors Relations Office
Export Control Office
Chemicals Division
Chemicals & Plastics Operations
Specialty Resins & Plastics Division
Specialty Chemicals Division
Acrylic Fibers Division
Filament Yarn Division
President
Senior
Managing
Director
Mitsubishi Rayon Textile Co., Ltd.
Fibers Operations
Cigarette Tow Division
Polypropylene Fibers Department
Mitsubishi Burlington Co., Ltd.
Carbon Fiber & Composite Materials Division
Information Materials Division
Aqua-Life Division
Specialty Products &
Engineering Operations
Mitsubishi Rayon Engineering Co., Ltd.
Ryoko Co., Ltd.
Otake Production Center, Toyohashi Production Center, Toyama Production Center,
Yokohama Production Center
Osaka Branch, Nagoya Branch
Tokyo Technology & Information Center
Raw Materials Purchasing Department
Corporate Technology
Technology Development Administration Department,
Utilities Center, Production Technology Center,
Safety, Environment & Quality Assurance Department,
Intellectual Property Department, Corporate Research Laboratories,
Products Development Laboratories,
Yokohama Research Laboratories
Corporate Administration
Personnel Department, General Administration Department,
Accounting Department, Osaka General Administration Department
(As of June 27, 2003)
36
Corporate Data
Meiji Life Insurance Co.
Nippon Life Insurance Co.
Mitsui Asset Trust and Banking Co., Ltd.
(trust account, 2 beneficiaries)
The Mitsubishi Trust and Banking Corp.
Mitsui Asset Trust and Banking Co., Ltd.
(trust account)
UFJ Trust Bank Ltd. (trust account A)
Mitsubishi Heavy Industries, Ltd.
Date of Establishment
August 31, 1933
Paid-in Capital
¥53,229 million
Authorized Shares
1,160,701,000 shares
Issued and Outstanding Shares
614,197,820 shares
Employees
Share distribution by type of
shareholder
8,872 (Group)
Main Banks
The Bank of Tokyo-Mitsubishi, Ltd.
The Mitsubishi Trust and Banking Corp.
The Norinchukin Bank
Mizuho Corporate Bank, Ltd.
Shareholders
88,711
(including those holding less than
one unit)
Financial institutions
53.6%
Securities companies
0.8%
Other companies, foundations, etc. 10.8%
Non-resident investors
6.4%
Individuals & others
28.4%
Major Shareholders
Japan Trustee Services Bank, Ltd.
(trust account)
The Master Trust Bank of Japan, Ltd.
(trust account)
The Bank of Tokyo-Mitsubishi, Ltd.
(As of March 31, 2003)
Offices
Head Office
(Public & Investors Relations Office)
6-41, Konan 1-chome, Minato-ku,
Tokyo 108-8506, Japan
Phone: (03) 5495-3100
Fax: (03) 5495-3184
E-mail: [email protected]
Osaka Branch
OAP Tower, 8-30,
Tenmabashi 1-chome,
Kita-ku, Osaka 530-6040, Japan
Phone: (06) 6881-6301
Fax: (06) 6881-6337
Nagoya Branch
Hokuriku Office
Otake Production Center
Toyohashi Production Center
Toyama Production Center
Yokohama Production Center
Corporate Research Laboratories
Products Development Laboratories
Yokohama Research Laboratories
Tokyo Technology & Information
Center
Overseas Service Bases
Mitsubishi Rayon America Inc.
400
747 Third Avenue, 19th Floor,
New York, NY 10017
Phone: 1 (212) 223-3043
Fax: 1 (212) 223-3017
300
MRC Asia (Thailand) Ltd.
Stock price range & trading volume
(¥)
500
100/63 Sathorn Nakorn Tower,
30th Floor, North Sathorn Road,
Khwaeng Silom, Khet Bangrak,
Bangkok 10500, Thailand
Phone: 66 (2) 636-7569
Fax: 66 (2) 636-7576
200
Quarterly volume
(Thousands of shares)
200,000
150,000
MRC Hong Kong Co., Ltd.
100,000
50,000
0
1st
2nd 3rd 4th 1st
99
2nd 3rd 4th
00
1st
2nd 3rd 4th 1st
01
2nd 3rd 4th 1st
02
03
Room 801, Tower 3,
China Hong Kong City,
33 Canton Road, Tsimshatsui,
Kowloon, Hong Kong
Phone: (852) 2368-0121
Fax: (852) 2724-4174
Mitsubishi Rayon Co., Ltd.
Shanghai Office
Please visit our Internet website at, http://www.mrc.co.jp/english/index.html
12 F-G Majesty Building 138
Pudong Avenue, Shanghai, China
Phone: (86) 21-5887-0314
Fax: (86) 21-5887-1902
(As of June 27, 2003)
37
6-41, KONAN 1-CHOME, MINATO-KU, TOKYO
108-8506, JAPAN
Printed in Japan
This report is printed on recycled paper.
03083100(DJ)A